Monaco: Emanuele Lauro cuts a very different figure to when he was last interviewed by Maritime CEO a year ago. The dry bulk bet that led to the world’s largest orderbook for bulkers has put serious salt on his wounds. He is in an extremely contrite mood when Maritime CEO comes calling, willing to take the blame for a gamble that has backfired on the bulk side, though is paying off on the tanker front.
“We have to face the music,” he says. Said funereal tone has seen Scorpio Bulkers selling off much of its orderbook and converting others to tankers where possible.
“Dry cargo was definitely a big bet,” Lauro concedes. “Analysis at the time was supporting our ideas,” he says, before cautioning: “We should not blame analysts, we should be blamed. We made mistakes, we read the market wrong. We acquired assets that are worth less than the acquisition price.”
When Scorpio began its bulk binge it was buying at what were then historically low prices – ultramaxes, for instance, were being snapped up for an average of $28m each. “They were great prices to come in – these ships were worth $70m during the peak,” laments Lauro.
Lauro says his team realised the market was not going to perform as he had hoped by the end of last summer, at which point an emergency fleet offload plan was first conceived.
“We did not know just how bad the market was going to turn, it’s a tragic scenario. The market has reached levels we did not expect,” he says.
The rout might not be over either, with Lauro noting that each bulker resale has been lower than the last.
Lauro is unsure if the dry bulk market has bottomed out. “I wish I knew the answer,” he says wistfully.
“It’s difficult to see a fast recovery in the market. Our wounds are still fresh and it would not be prudent from our side to make a case to say that the market has bottomed out and a recovery is in place,” he says.
The mood brightens as Lauro turns to tankers. 90% of the Scorpio Tankers fleet is now on the water at good rates.
“We are still experiencing counter seasonal strong rates in the product trades,” he says.
Scorpio just recently raised equity to get resales of four LR2s for delivery from June to September.
The other sector that gives Lauro confidence is containers, where the company has three-plus-three 20,000-teu containerships on order at Samsung Heavy Industries with a partner. More orders could follow.
“We look at the future in the container market with excitement,” he says.
Overall, however, Lauro says the coming 12 months is all about consolidation at Scorpio as the fleet nears 90 vessels.
The company’s history dates back to the 1950s and pioneering entrepreneur Glauco Lolli-Ghetti’s rise in the Italian shipping concern Navigazione Alta Italia. Lolli-Ghetti founded Scorpio Ship Management in 1973. The legendary shipowner then wheeled and dealed his way through many a cycle, before slashing his shipping portfolio in the later 1990s. He selected his grandson, Lauro, to take over from him.